Lao Coffee and Tea Yan Yue Se: A Third Round of Store Closures in Changsha

On November 7, Chayan Yuese announced on its official Weibo that several stores in densely served parts of Changsha had temporarily closed, and the topic trended quickly. On November 10 the brand confirmed this was its third round of concentrated temporary closures in 2021, after the Spring Festival stay-put call and the late-July pandemic resurgence.

The Changsha tea drink brand said that after benefiting from dense store placement, it is using concentrated closures to secure room to survive and develop. Staff have meanwhile been sent to Liuyang, Zhuzhou, and Yueyang to research and open stores. Founder Lü Liang has taken a cautious line on expansion, and the closures read as both crisis response and preparation for a next round.

On November 7, the official Weibo account of Chayan Yuese announced temporary closures of some stores in areas of Changsha where the brand has a dense presence, and the topic quickly trended on Weibo. On November 10, the brand further responded that this was already the third round of concentrated temporary closures this year: the local Chinese New Year stay-put period at the start of the year, the resurgence of the pandemic in late July, and this latest adjustment. As a tea drink brand that started in Changsha, Chayan Yuese's move has drawn widespread attention—against the backdrop of repeated pandemic outbreaks and intensifying industry competition, is its proactive contraction after dense store placement and deployment of staff to Liuyang, Zhuzhou, Yueyang and other places for research and store openings merely an expedient response to the crisis, or is it building strength for the next round of expansion? This article sorts through the timeline and background of the three closures and reviews founder Lü Liang's cautious attitude toward brand expansion.

At around 12:30 p.m. on November 7, Chayan Yuese announced via its official Weibo that in some areas of Changsha with a relatively dense distribution of stores, several outlets had entered a state of temporary closure. Soon afterward, the topic "Chayan Yuese responds to third round of concentrated temporary closures" shot up the Weibo trending list.

At around 2 p.m. on November 10, Chayan Yuese's official Weibo issued a formal explanation regarding the closures. The brand said this round of temporary closures was already the third concentrated action this year: the first occurred during the call to stay put for Chinese New Year at the start of the year, the second came with the resurgence of the pandemic in late July, and the third is the current round.

Judging from the development trajectories of many food and beverage brands, after a period of rapid expansion, store closures and adjustments are almost unavoidable. In its response, Chayan Yuese also admitted that after enjoying the dividends of dense store placement, using concentrated temporary closures for adjustment is meant to secure room for survival and development.

Looking back at the first round of concentrated temporary closures, the timing fell around the 2021 Spring Festival: 1 store closed starting in January, 7 stores closed starting February 1, 39 stores closed starting February 7, 7 stores closed starting February 10, and 1 store closed starting February 11. The vast majority of stores resumed business before the Lantern Festival, and only a very small number did not reopen until March 7. The November 10 response attributed this round of closures to "staying put for Chinese New Year at the start of the year."

The second round of concentrated temporary closures was directly related to the resurgence of the pandemic in late July. On July 29, the Office of the Changsha Municipal COVID-19 Prevention and Control Command issued an emergency notice stating that 2 confirmed COVID-19 cases had been monitored traveling from Yiyang through Changsha back to Beijing on July 25 and had bought Chayan Yuese at Changsha South Railway Station. The next day, July 30, Chayan Yuese responded quickly by quarantining the relevant staff, and the stores visited by the confirmed cases were also closed.

In addition, during the May Day holiday, some Chayan Yuese stores were also temporarily closed in a concentrated manner: a total of 18 stores were closed from May 1 to May 5, and employees at these stores were reassigned to support stores in popular commercial districts with concentrated holiday foot traffic.

This third round of concentrated temporary closures was partly a response to the resurgence of the pandemic and partly preparation for the brand's next phase of expansion—deploying staff to Liuyang, Zhuzhou, Yueyang and other places for on-the-ground research and store-opening preparation.

In its response, Chayan Yuese also specifically clarified rumors of "closing stores to transfer shop spaces." Previously, intermediary agents had posted shop transfer advertisements on Chayan Yuese stores, causing many fans of the brand to worry and bringing unnecessary trouble to both the brand and consumers.

Regarding why Chayan Yuese does not expand outward, founder Lü Liang once said: I am timid and hold the market in awe. If I mistake the dividends granted by the times for my own strength, going out would mean becoming the next dead internet-famous brand.

After testing the waters with a pop-up store at Shenzhen Wenheyou, Chayan Yuese became even more firm in the idea of temporarily not entering first-tier markets. Haidilao is a vivid reference: in 2020 it opened more than 500 new stores, each with 100 employees, adding 50,000 employees in total; now Haidilao plans to shut 300 stores before the end of 2021, many of them newly opened in 2020 and 2021.

Under the dual pressure of the pandemic and industry competition, can Chayan Yuese truly step outside Hunan Province in the future? This is still a question many consumers care about.

Image source: Chayan Yuese official Weibo

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The above content is compiled by CoffeeHunters, a coffee news website.